history management

ES27 Engineering Management Notes on History of ManagementAdapted from Asst. Prof.Dr. Nilay ALUFTEKİN

HISTORICAL DEVELOPMENT OF MANAGEMENT THEORY AND PRACTICES

I. INTRODUCTION

In our modern day economy, customers’s needs are changing rapidly, competition is becoming global, and technology is advancing at an ever-increasing speed. To maintain competitiveness in such a challenging environment companies need effective leaders who understand technology and business. Engineers with proper management training have great opportunities to make valuable and lasting contributions.

In all companies managers are select employees who are entrusted with a responsibilities of putting communications means to use, taking decisive actions and utilizing resourses and guiding the behaviour of internal teams and external business partners to achieve company objectives.

The communication means applied by managers may be verbal or written, with or without body language. The actions taken include planning, organizing, leading and controlling. The resources utilized are people time, capital, equipment, facilities, technology, know-how, and business relationship. The teams guided by managers are individual employees (teams of one), projects, task forces, quality circles, and others. The external business partners involved are customers, suppliers, networked partners, and joint ventures.

II. HISTORICAL DEVELOPMENT OF MANAGEMENT THEORY AND PRACTICES

It can be deducted, that from earliest recorded

times groups of people have been organized to

work together towards planned goals. Their efforts

coordinated and controlled to achieve such

outcomes. Though the term scientific management

did not come into being well into the Industrial

Revolution (the latter half of the 19th century,) its

history is, on reflection, much longer than the term itself. Consider the management skills

required, by the ancient Egyptians to build their pyramids, by the ancient Chinese to build the

Great Wall of China, the management skills of the Mesopotamians to irrigate their land and

wall their cities, of the Romans when building their roads, aqueducts and Hadrian's Wall. All

these man-made constructions required large amounts of human effort and therefore

organization i.e. planning, control and coordination. The Great Pyramid for example is 75600


square feet at its base, 480 feet high, and contains over 2 million blocks of stone, each

weighing 2.5 tons. The base of the structure is only 7 inches from being a perfect square. This

was achieved with no computer, electronic calculator, modern materials handling equipment

or advanced mathematical techniques models.

Figure 1. The Evolution of Management Theory

1. Scientific Management

The evolution of modern management began in the

closing decades of the nineteenth century, after the

industrial revolution had swept through Europe,

Canada, and the United States. In the new economic

climate, managers of all types of organizations—

political, educational, and economic—were

increasingly trying to find better ways to satisfy

customers’ needs. Many major economic, technical,

and cultural changes were taking place at this time. The introduction of steam power and the

development of sophisticated machinery and equipment changed the way in which goods

were produced, particularly in the weaving and clothing industries. Small workshops run by

skilled workers who produced hand-manufactured products (a system called crafts

production) were being replaced by large factories in which sophisticated machines controlled

by hundreds or even thousands of unskilled or semiskilled workers made products. Owners

and managers of the new factories found themselves unprepared for the challenges


accompanying the change from small-scale crafts production to large-scale mechanized

manufacturing. Many of the managers and supervisors had only a technical orientation, and

were unprepared for the social problems that occur when people work together in large groups

(as in a factory or shop system). Managers began to search for new techniques to manage their

organizations’ resources, and soon they began to focus on ways to increase the efficiency of

the worker–task mix.

2. Job Specialization and the Division of Labour

The famous economist Adam Smith was one of the first to look at the effects of different

manufacturing systems. He compared the relative performance

of two different manufacturing methods. The first was similar

to crafts-style production, in which each worker was

responsible for all of the 18 tasks involved in producing a pin.

The other had each worker performing only 1 or a few of the

18 tasks that go into making a completed pin. Smith found that

factories in which workers specialized in only 1 or a few tasks

had greater performance than factories in which each worker

performed all 18 pin-making tasks. In fact, Smith found that 10

workers specializing in a particular task could, between them,

make 48 000 pins a day, whereas those workers who performed all the tasks could make only

a few thousand at most.

Smith reasoned th at this difference in performance was due to the fact that the workers who

specialized became much more skilled at their specific tasks, and, as a group, were thus able

to produce a product faster than the group of workers who each had to perform many tasks.

Smith concluded that increasing the level of job specialization—the process by which a

division of labour occurs as different workers specialize in different tasks over time—

increases efficiency and leads to higher organizational performance. Based on Adam Smith’s

observations, early management practitioners and theorists focused on how managers should

organize and control the work process to maximize the advantages of job specialization and

the division of labour.

3. F.W. Taylor and Scientific Management


Frederick W. Taylor (1856–1915) is best known for defining the techniques of scientific

management, the systematic study of relationships between people and tasks for the purpose

of redesigning the work process to increase efficiency. Taylor believed that if the amount of

time and effort that each worker expended to produce a unit of output (a finished good or

service) could be reduced by increasing specialization and the division of labour, then the

production process would become more efficient. Taylor believed that the way to create the

most efficient division of labour could best be determined by means of scientific management

techniques, rather than intuitive or informal rule-of-thumb knowledge. Based on his

experiments and observations as a manufacturing manager in a variety of settings, he

developed four principles to increase efficiency in the workplace:

Principle 1: Study the way workers perform their tasks, gather all the informal job

knowledge that workers possess, and experiment with ways of improving the way tasks are

performed.

To discover the most efficient method of performing specific tasks, Taylor studied in great

detail and measured the ways different workers went about performing their tasks. One of the

main tools he used was a time-and-motion study, which

involves the careful timing and recording of the actions

taken to perform a particular task. Once Taylor understood

the existing method of performing a task, he tried different

methods of dividing and coordinating the various tasks

necessary to produce a finished product. Usually this meant

simplifying jobs and having each worker perform fewer,

more routine tasks, as at the pin factory or on Ford’s car

assembly line. Taylor also sought ways to improve each

worker’s ability to perform a particular task—for example, by reducing the number of

motions workers made to complete the task, by changing the layout of the work area or the

type of tool workers used, or by experimenting with tools of different sizes.

Principle 2: Codify the new methods of performing tasks into written rules and standard

operating procedures.

Once the best method of performing a particular task was determined, Taylor specified that it

should be recorded so that the procedures could be taught to all workers performing the same


task. These rules could be used to standardize and simplify jobs further—essentially, to make

jobs even more routine. In this way, efficiency could be increased throughout an organization.

Principle 3: Carefully select workers so that they possess skills and abilities that match the

needs of the task, and train them to perform the task according to the established rules and

procedures.

To increase specialization, Taylor believed workers had to understand the tasks that were

required and be thoroughly trained in order to perform the tasks at the required level. Workers

who could not be trained to this level were to be transferred to a job where they were able to

reach the minimum required level of proficiency.

Principle 4: Establish a fair or acceptable level of performance for a task, and then develop

a pay system that provides a reward for performance above the acceptable level.

To encourage workers to perform at a high level of efficiency, and to provide them with an

incentive to reveal the most efficient techniques for performing a task, Taylor advocated that

workers should benefit from any gains in performance. They should be paid a bonus and

receive some percentage of the performance gains achieved through the more efficient work

process.

4. Fordism in Practice

From 1908 to 1914, through trial and error, Henry Ford’s talented team of production

managers pioneered the development of the moving conveyor belt and thus changed

manufacturing practices forever. Although the technical aspects of the move to mass

production were a dramatic financial success for Ford and for the millions of Americans who

could now afford cars, for the workers who actually produced the cars, many human and

social problems resulted. With simplification of the work process, workers grew to hate the

monotony of the moving conveyor belt. By 1914, Ford’s car plants were experiencing huge

employee turnover—often reaching levels as high as 300 or 400 percent per year as workers

left because they could not handle the work-induced stress.

Henry Ford recognized these problems and made an

announcement: From that point on, to motivate his

workforce, he would reduce the length of the workday from


nine hours to eight hours, and the company would double the basic wage from US$2.50 to

US$5.00 per day. This was a dramatic increase, similar to an announcement today of an

overnight doubling of the minimum wage. Ford became an internationally famous figure, and

the word “Fordism” was coined for his new approach.

Ford’s apparent generosity was matched, however, by an intense effort to control the

resources—both human and material—with which his empire was built. He employed

hundreds of inspectors to check up on employees, both inside and outside his factories. In the

factory, supervision was close and confining. Employees were not allowed to leave their

places at the production line, and they were not permitted to talk to one another. Their job was

to concentrate fully on the task at hand. Few employees could adapt to this system, and they

developed ways of talking out of the sides of their mouths, like ventrilo- quists, and invented

a form of speech that became known as the “Ford Lisp.”

Ford’s obsession with control brought him into greater and greater conflict with managers,

who were often fired when they disagreed with him. As a result, many talented people left

Ford to join his growing rivals. Outside the workplace, Ford went so far as to establish what

he called the “Sociological Department” to check up on how his employees lived and the

ways in which they spent their time. Inspectors from this department visited the homes of

employees and investigated their habits and problems. Employees who exhibited behaviours

contrary to Ford’s standards (for instance, if they drank too much or were always in debt)

were likely to be fired. Clearly, Ford’s effort to control his employees led him and his

managers to behave in ways that today would be considered unacceptable and unethical, and

in the long run would impair an organization’s ability to prosper.

Despite the problems of worker turnover, absenteeism, and discontent at Ford Motor

Company, managers of the other car companies watched Ford reap huge gains in efficiency

from the application of the new management principles. They believed that their companies

would have to imitate Ford if they were to survive. They followed Taylor and used many of

his followers as consultants to teach them how to adopt the techniques of scientific

management. In addition, Taylor elaborated his principles in several books, including Shop

Management(1903) and The Principles of Scientific Management(1911), which explain in

detail how to apply the principles of scientific management to reorganize the work system.


Taylor’s work has had an enduring effect on the management of production systems.

Managers in every organization, whether it produces goods or services, now carefully analyze

the basic tasks that must be performed and try to devise the work systems that will allow their

organizations to operate most efficiently.

5. The Gilbreths

Two prominent followers of Taylor were Frank Gilbreth (1868–1924) and Lillian Gilbreth

(1878–1972), who refined Taylor’s analysis of work movements and made many con-

tributions to time-and-motion study. Their aims were to;

(1) break up into each of its component actions and analyze every individual action

necessary to perform a particular task,

(2) find better ways to perform each component action, and

(3) reorganize each of the component actions so that the action as a whole could be performed

more efficiently—at less cost of time and effort.

The Gilbreths often filmed a worker performing a particular task

and then separated the task actions, frame by frame, into their

component movements. Their goal was to maximize the

efficiency with which each individual task was performed so

that gains across tasks would add up to enormous savings of

time and effort. Their attempts to develop improved

management principles were captured—at times quite humorously—in the movie Cheaper by

the Dozen, which depicts how the Gilbreths (with their 12 children) tried to live their own

lives according to these efficiency principles and apply them to daily actions such as shaving,

cooking, and even raising a family.

Eventually, the Gilbreths became increasingly interested in the study of fatigue. They studied

how the physical characteristics of the workplace contribute to job stress that often leads to

fatigue and thus poor performance. They isolated factors— such as lighting, heating, the

colour of walls, and the design of tools and

machines—that result in worker fatigue. Their

pioneering studies paved the way for new advances

in management theory. In workshops and factories,


the work of the Gilbreths, Taylor, and many others had a major effect on the practice of

management.

In comparison with the old crafts system, jobs in the new system were more repetitive, boring,

and monoto- nous as a result of the application of scientific management principles, and work-

ers became increasingly dissatisfied.

Frequently, the management of work settings became a game between workers and managers:

Managers tried to initiate work practices to increase performance, and workers tried to hide

the true potential efficiency of the work setting in order to protect their own well-being.

6. Administrative Management Theory

Side by side with scientific managers studying the person–task mix to increase efficiency,

other researchers were focusing on administrative management, the study of how to create

an organizational structure that leads to high efficiency and effectiveness. Organizational

structure is the system of task and authority relationships that control how employees use

resources to achieve the organization’s goals. Two of the most influential views regarding the

creation of efficient systems of organizational administration were developed in Europe. Max

Weber, a German professor of sociology, developed one theory. Henri Fayol, the French

manager who developed a model of management developed the other.

a) The Theory of Bureaucracy

Max Weber (1864–1920) wrote at the turn of the twentieth century, when Germany was

undergoing its industrial revolution. To help Germany manage its growing industrial

enterprises at a time when it was striving to become a world power, Weber developed the

principles of bureaucracy—a formal system of organization and administration designed to

ensure efficiency and effectiveness. A bureaucratic system of administration is based on five

principles;

Principle 1: In a bureaucracy, a manager’s formal authority derives from the position he

or she holds in the organization.

Authority is the power to hold people accountable for their actions and to make decisions

concerning the use of organizational resources. Authority gives managers the right to direct

and control their subordinates’ behaviour to achieve organizational goals. In a bureaucratic

system of administration, obedience is owed to a manager, not because of any personal

qualities that he or she might possess—such as personality, wealth, or social status—but


because the manager occupies a position that is associated with a certain level of authority and

responsibility.

Principle 2: In a bureaucracy, people should occupy positions because of their

performance, not because of their social standing or personal contacts.

This principle was not always followed in Weber’s time and is often ignored today. Some

organizations and industries are still affected by social networks in which personal contacts

and relations, not job-related skills, influence hiring and promotional decisions.

Principle 3: The extent of each position’s formal authority and task responsibilities, and its

relationship to other positions in an organization, should be clearly specified.

When the tasks and authority associated with various positions in the organization are clearly

specified, managers and workers know what is expected of them and what to expect from

each other. Moreover, an organization can hold all its employees strictly accountable for their

actions when each person is completely familiar with his or her responsibilities.

Principle 4: So that authority can be exercised effectively in an organization, positions

should be arranged hierarchically, so employees know whom to report to and who reports

to them.

Managers must create an organizational hierarchy of authority that makes it clear who reports

to whom and to whom managers and workers should go if conflicts or problems arise. This

principle is especially important in the armed forces and other organizations that deal with

sensitive issues involving possible major repercussions. It is vital that managers at high levels

of the hierarchy be able to hold subordinates accountable for their actions.

Principle 5: Managers must create a well-defined system of rules, standard operating

procedures, and norms so that they can effectively control behaviour within an

organization.

Rules are formal written instructions that specify actions to be taken under different

circumstances to achieve specific goals (for example, if A happens, do B).

Standard operating procedures (SOPs) are specific sets of written instructions about how to

perform a certain aspect of a task. A rule might state that at the end of the workday


employees are to leave their machines in good order, and a set of SOPs then specifies exactly

how they should do so, itemizing which machine parts must be oiled or replaced.

Norms are unwritten, informal codes of conduct that prescribe how people should act in

particular situ- ations. For example, an organizational norm in a restaurant might be that

waiters should help each other if time permits.

Rules, SOPs, and norms provide behavioural guidelines that improve the performance of a

bureaucratic system because they specify the best ways to accom- plish organizational tasks.

Companies such as McDonald’s and Wal-Mart have developed extensive rules and

procedures to specify the types of behaviours that are required of their employees, such as,

“Always greet the customer with a smile.”

Weber believed that organizations that implement all five principles will establish a

bureaucratic system that will improve organizational performance. The specification of

positions and the use of rules and SOPs to regulate how tasks are performed make it easier for

managers to organize and control the work of subordinates. Similarly, fair and equitable

selection and promotion systems improve managers’ feelings of security, reduce stress, and

encourage organizational mem- bers to act ethically and further promote the interests of the

organization.

If bureaucracies are not managed well, however, many problems can result. Sometimes,

managers allow rules and SOPs—“bureaucratic red tape”—to become so cumbersome that

decision making becomes slow and inefficient and organizations are unable to change. When

managers rely too much on rules to solve problems and not enough on their own skills and

judgment, their behaviour becomes inflexible. A key challenge for managers is to use

bureaucratic principles to benefit, rather than harm, an organization.

b) Fayol’s Principles of Management

Working at the same time as Weber but independently of him, Henri Fayol (1841–1925), the

CEO of Comambault Mining, identified 14 principles (summarized in Figure 2.) that he

believed to be essential to increasing the efficiency of the management process.


Some of the principles that Fayol outlined have faded from contemporary management

practices, but most have endured.

Figure 2. Fayol’s Principles of Management

The principles that Fayol and Weber set forth still provide a clear and appropriate set of

guidelines that managers can use to create a work setting that makes efficient and effective

use of organizational resources. These principles remain the bedrock of modern management

theory; recent researchers have refined or developed them to suit modern conditions. For

example, Weber’s and Fayol’s concerns for equity and for establishing appropriate links

between performance and reward are central themes in contemporary theories of motivation

and leadership.

7. Behavioural Management Theory

The study of how managers should behave in order to motivate employees and encourage

them to perform at high levels and be committed to the achievement of organizational goals.

The behavioural management theorists writing in the first half of the twentieth century all

espoused a theme that focused on how managers should personally behave in order to


motivate employees and encourage them to perform at high levels and be committed to the

achievement of organizational goals. The “Management Insight” indicates how employees

can become demoralized when managers do not treat their employees properly.

8. Management Science Theory

An approach to management that uses rigorous quantitative techniques to help managers

make maximum use of organizational resources. Management science theory is a

contemporary approach to management that focuses on the use of rigorous quantitative

techniques to help managers make maximum use of organizational resources to produce

goods and services. In essence, management science theory is a contemporary extension of

scientific management, which, as developed by Taylor, also took a quantitative approach to

measuring the worker–task mix in order to raise efficiency. There are many branches of

management science; each of them deals with a specific set of concerns:

Quantitative management utilizes mathematical techniques—such as linear and

nonlinear programming, modelling, simulation, queuing theory, and chaos theory—to

help managers decide, for example, how much inventory to hold at different times of

the year, where to locate a new factory, and how best to invest an organization’s

financial capital.

Operations management (or operations research) provides managers with a set of

techniques that they can use to analyze any aspect of an organization’s production

system to increase efficiency.

Total quality management (TQM)focuses on analyzing an organization’s input,

conversion, and output activities to increase product quality.

Management information systems (MIS )help managers design information systems

that provide information about events occurring inside the organization as well as in

its external environment—information that is vital for effective decision making.

All these subfields of management science provide tools and techniques that managers can use

to help improve the quality of their decision making and increase efficiency and effectiveness.

9. Organizational Environment Theory

The set of forces and conditions that operate beyond an organization’s boundaries but affect a

manager’s ability to acquire and utilize resources. An important milestone in the history of


management thought occurred when researchers went beyond the study of how managers can

influence behaviour within organizations to consider how managers control the organization’s

relationship with its external environment, or organizational environment—the set of forces

and conditions that operate beyond an organization’s boundaries but affect a manager’s ability

to acquire and utilize resources.

Resources in the organizational environment include the raw materials and skilled people that

an organization requires to produce goods and services, as well as the support of groups

including customers who buy these goods and services and provide the organization with

financial resources. One way of determining the relative success of an organization is to

consider how effective its managers are at obtaining scarce and valuable resources. The

importance of studying the environment became clear after the development of open-systems

theory and contingency theory during the 1960s.

10. Contingency Theory

Another milestone in management theory was the development of contingency theory in the

1960s by Tom Burns and G.M. Stalker in the United Kingdom and Paul Lawrence and Jay

Lorsch in the United States.

The crucial message of contingency theory is that there is no one best way to organize: The

organizational structures and the control systems that managers choose depend on—are

contingent on—characteristics of the external environment in which the organization operates.

According to contingency theory, the characteristics of the environment affect an

organization’s ability to obtain resources. To maximize the likelihood of gaining access to

resources, managers must allow an organization’s departments to organize and control their

activities in ways most likely to allow them to obtain resources, given the constraints of the

particular environment they face. In other words, how managers design the organizational

hierarchy, choose a control system, and lead and motivate their employees is contingent on

the characteristics of the organizational environment.

history management

Documents